How a chipmaker has some of Wall Street nervous about Apple's iPhone 7

On an earnings call last week, audio semiconductor company Cirrus Logic's CEO Jason Rhode said that despite a sunnier overall outlook for his company, he is not expecting "any outlandish unit growth in the mobile market," according to an earnings conference call transcribed by FactSet.
While Rhode did not mention the iPhone-maker directly, he noted the "intense interest" among investors related to their largest customer — widely understood to be Apple — which is expected to announce a new iPhone as soon as September.
"We certainly decline to provide guidance itself, but if you've got to have something for your model, I would kind of look at the last handful of years for September to December and just pick something on the low end of that sequential growth — low end of that spectrum just to be conservative," Rhode said.
Some analysts were reading the tea leaves from Rhodes' comments, noting the company also seemed to be seeing a "more cautious" iPhone 7 build
compared to the iPhone 6s. That would be consistent with results from Skyworks, Texas Instruments, Knowles and other iPhone suppliers, KeyBanc analysts John Vinh and Jun Wang wrote.
After Cirrus' report, KeyBanc's Vinh and Wang wrote they believed that iPhone 7 component orders were tracking down 15 to 20 percent compared to the
second half of 2015.
Indeed, despite the uncertainty around how consumers could react to new products this fall, Rhode seemed to
leave the door open for a blockbuster iPhone, too, saying Cirrus is trying to balance the possibility of getting stuck with excess inventory with the possibility of resource constraints.
"That said, like happened a couple years ago, [in] the whole industry there was a product that hit the ball out of the park and the whole industry was completely out of capacity all the way through June. If that sort of thing happens, there's not much we can do about it," Rhode said on the call. "It's certainly something we
have our eyes on in case things take off."
Cirrus also weighed in on the elimination of headphone jacks from phones, a move that some say may happen on an upcoming iPhone.
"We've already seen multiple Android handsets that are shipping that eliminated the headphone jack and either ship with or have as an accessory a USB headset or an adapter of some sort," Rhode said. "So that's a really remarkable opportunity, and we're very well-situated to capitalize on that."
In spite of speculation around iPhone demand, Wall Street saw bright spots in the report for Cirrus.
The company reported better-than-expected earnings last week amid strong demand for portable audio
products. Shares popped 19 percent on Thursday , days after Apple also reported iPhone sales that weren't as
bad as expected during the quarter.
Canaccord analysts note Cirrus has share expansion within the Android ecosystem. Stifel analyst Tore Svanberg raised the price target on Cirrus, citing
progress to win momentum in digital headsets amid softer iPhone growth.
"While we recognized that there continues to be a considerable level of conservatism and skepticism on iPhone units, sales, we still, however remain
comfortable with the company's abilities to significantly outgrow its peers," Svanberg wrote.